THE COMMISSIONER OF IT-I vs. M/S REGIONAL COMPUTER CENTRE

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ITA/399/2005HC Punjab & HaryanaPHHC01073766200507 November 2006Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT was correct in confirming the deletion of the disallowance of depreciation. The Tribunal had followed the judgment of the Hon'ble Supreme Court in CIT Vs. P.J. Chemicals Ltd. (1994) 210 ITR 830. The High Court found that the learned counsel for the revenue was unable to demonstrate how the Supreme Court's judgment in P.J. Chemicals Ltd. was not applicable to the present case. Therefore, the High Court concluded that no substantial question of law arose from the ITAT's order. The appeal was dismissed, upholding the assessee's claim for depreciation on the assets purchased from grant-in-aid.

What were the facts?

The Revenue, Commissioner of Income Tax-I, Chandigarh, has appealed against an order of the Income Tax Appellate Tribunal (ITAT) concerning the assessment year 1998-99. The assessee, M/s Regional Computer Centre, Chandigarh, purchased machinery using grant-in-aid received from various government and other organizations. The Assessing Officer disallowed depreciation on this machinery, arguing that since the asset was purchased out of grant-in-aid, depreciation was not admissible. The assessee's claim for depreciation was upheld by the CIT(A) and subsequently by the Tribunal. The ITAT relied on the Supreme Court's decision in CIT Vs. P.J. Chemicals Ltd. for similar claims in earlier assessment years.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in confirming the order of the CIT(A) deleting the disallowance of depreciation to the extent of Rs.38,38,822/- on assets purchased out of grant-in-aid received from various organizations/government? (Question of law) Assessee's Contention: The assessee's claim for depreciation on assets purchased out of grant-in-aid was upheld by the Tribunal, following the Supreme Court's judgment in CIT Vs. P.J. Chemicals Ltd. (1994) 210 ITR 830. Revenue's Contention: The revenue argued that depreciation was not admissible on assets purchased with grant-in-aid. However, the judgment does not record specific arguments from the revenue beyond the initial disallowance by the AO, nor does it name any specific authorities, circulars, or precedents relied upon by the revenue in the High Court.

Which sections of the Income-tax Act were involved?

Section 32

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

**** I.T.A. No.399 of 2005 Date of Decision:7.11.2006 The Commissioner of Income Tax-I, Chandigarh .....Appellant Vs. M/s Regional Computer Centre, Chandigarh

.....Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present:- Shri S.K.Garg Narwana, Advocate for the appellant. **** ADARSH KUMAR GOEL, J. The revenue has approached this Court by filing the present appeal raising the following substantial question of law arising out of order passed by the Income Tax Appellate Tribunal, Chandigarh Bench `B' (for short, `the Tribunal') in ITA Nos.876/Chandi/2001 and No.866/ Chandi/2001 dated 14.3.2005 in respect of assessment year 1998-99:- “Whether on facts and in the circumstances of the case, the Hon'ble ITAT was right in law in confirming the order of the CIT(A) deleting the disallowance of the claim of depreciation to the extent of Rs.38,38,822/- on the asset which was purchased by the assessee out of grant-in-aid received from various organizations/government?” The assessee received grant-in-aid from various organisations of government and purchased machinery and the Assessing Officer held that the assessee was not entitled to depreciation on the cost of machinery as it had received grant-in-aid. The claim of the assessee was upheld by the Tribunal following the judgment of Hon'ble the Supreme Court in CIT Vs. P.J.Chemicals Ltd., (1994) 210 ITR 830 for the assessment year 1984-85 as well as for

I.T.A. No.399 of 2005 -2- other assessment years. Following the same, the Tribunal upheld the claim for depreciation for the assessment year in question. Since the Tribunal has followed the judgment of Hon'ble the Supreme Court and learned counsel for the revenue had not been able to show as to how the judgment of Hon'ble the Supreme Court in P.J. Chemicals Ltd. (supra) is not applicable to the present case, we are of the view that no substantial question of law arises. Accordingly, the appeal is dismissed.

( ADARSH KUMAR GOEL ) JUDGE November 7, 2006 ( RAJESH BINDAL ) renu JUDGE

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